San Marcos officials project budget surplus

SAN MARCOS -- For the fifth straight year, the city of San
Marcos should have extra money left in its budget for future
programs or projects when the fiscal year ends on June 30,
officials said recently.

Based on expenditures and revenues from July through December
last year, City Manager Rick Gittings predicted San Marcos will
have a roughly $1 million surplus because it will bring in more
than the $52 million budgeted for this fiscal year.

"We can put the extra money in the city's investment portfolio
and eventually use it for capital improvement projects or to expand
our programs," Gittings said.

Gittings said the extra money would not go to any specific
projects, but could be used to build roads and parks or hire
sheriff's deputies.

The city is in the process of developing the budget for next
year, and in the coming months the city's budget review committee
will begin to review the plans. The city's three-year projections
call for only a small budget increase next year to about $53
million, but the City Council will set the final budget sometime
before July.

With the budget the council adopted last summer, Gittings said,
there is no concern that costs will exceed revenues and force San
Marcos to cut programs to balance its budget.

Instead, he expects the city to bring in more money than it
spends for the fifth straight year, and he said the city has built
up about $50 million in reserves.

Last year $54 million in revenue eclipsed expenditures of $43
million while revenue of $46.7 million surpassed $38.5 million in
spending in fiscal year 2003-04 and income of $41.9 million
exceeded $34 million in expenditures in 2002-03.

"We are doing a great job with our budget, and I have confidence
we'll come out way ahead this year," Councilwoman Pia Harris-Ebert
said. "The council always intends to have a surplus, and you have
to have some money to fall back on in case of an emergency."

Last year the city had a surplus of about $11 million, but there
should be less extra money this year because of increased spending
on employee benefits and the hiring of nine additional firefighters
and a 24-hour sheriff's patrol unit.

With the additions, the city's overall costs jumped more than 20
percent from about $43 million last year to about $52 million this
year.

"This makes sense and the city is not out to make a profit but
is out to provide services," said Councilman Mike Preston. "If we
have a surplus the city should spend a fair portion of it."

The city spent about $26 million, or roughly 50 percent of the
total budget, the first half of the fiscal year, Gittings said.

He said expenditures remain pretty constant throughout the year,
and the city airs on the side of caution with expected costs.

"We try to put more money away than we need so we don't have to
look for it later," Gittings said.

He said that although there have been no major changes in the
expected costs this year, revenues should be slightly higher than
expected.

Gittings expected this year to receive about $500,000 more in
sales tax than the $16.25 million budgeted and a couple of hundred
thousand more than the $5.7 million expected in property tax
revenue.

But the city hasn't received the bulk of its revenue yet.

In the first six months of the fiscal year, the city received
only about $17 million in revenue, which is only 32 percent of the
expected total.

Gittings said receiving less than 50 percent of the total
revenue in the first six months of the fiscal year is normal
because cities don't get a large chunk of their share in property
tax and sales tax revenue from the state until the second part of
the year.

The city has received about $4 million, or 25 percent of the
expected total, in sales tax and less than 45 percent of the
expected revenue in property tax, Gittings said.

He expects the city to start receiving most of this money in the
coming months and for revenue to start catching up with
expenditures.

"If we're not even by the end of February we will have to take
some action," Gittings said.

But San Marcos is in a good position, said Jo MacKenzie, who has
been on the city's budget review committee since 1995.

MacKenzie said the committee looked at this year's budget
projections a couple of months ago and were confident the city
would have a surplus.

"Having been on the budget review committee for so long, the
best comfort is knowing how the city budgets," MacKenzie said. "The
city budgets expenditures where they should be and maybe a little
higher and they probably budget revenue a little lower than it
actually is. They don't count their chickens before they
hatch."